Singapore’s core inflation eases to 4.7% in May

Singapore's core inflation eases to 4.7% in May
Buildings in Singapore’s central business district on Nov 16, 2022. (Photo: CNA/Hanidah Amin)

SINGAPORE: Singapore’s core inflation eased to 4.7 per cent year-on-year in May, official data showed on Friday (Jun 23).

Core inflation had risen to 5.5 per cent in February and January this year, a 14-year high, before falling to 5 per cent in March and April.

The decline in core inflation was mainly driven by falling inflation for services and food, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI).

Core inflation excludes accommodation and private transport costs. May’s figure of 4.7 per cent matched a Reuters poll of economists.

Overall inflation fell to 5.1 per cent on a year-on-year basis in May, down from 5.7 per cent in the previous month. This largely reflected a fall in private transport inflation, in addition to lower core inflation.


Private transport inflation fell to 7.2 per cent in May from 10.4 per cent as car prices rose at a slower pace and the cost of petrol saw a sharper fall.

Food inflation eased to 6.8 per cent in May from 7.1 per cent in the previous month.

Services inflation fell from 4.3 per cent in April to 3.9 per cent in May, due to smaller increases in holiday expenses and point-to-point transport service costs.

Accommodation inflation also experienced – from 4.9 per cent to 4.7 per cent – as housing rents rose at a slower pace.

Similarly, inflation for retail and other goods moderated to 2.8 per cent from April’s 2.9 per cent as the pricing of clothing, footwear and household durables recorded smaller increases.

Meanwhile, electricity and gas inflation rose to 3.3 per cent from 2.7 per cent due to a larger increase in electricity costs.

“Global supply chain frictions and consumer goods inflation in the advanced economies have continued to ease,” said MAS and MTI, adding that global energy and food commodity prices also moderated further.

“As a result, prices of Singapore’s imported goods have continued to decline on year-on-year terms.”

Locally, unit labour costs are expected to rise further in the near term and businesses are expected to continue to pass through accumulated labour costs to consumer prices. MAS and MTI noted that it would happen at a “more moderate pace”  amid a slowdown in domestic activity.

Core Inflation is expected to moderate further in the second half of the year as imported costs are reduced and the current tightness in the domestic labour market eases, they added.

At the same time, the increase in COE quota and supply of housing units available for rental, private transport and accommodation inflation are expected to moderate over the course of the year.

For 2023 as a whole, the authorities project headline inflation to average between 5.5 per cent to 6.5 per cent and core inflation to average 3.5 per cent to 4.5 per cent.

Excluding the transitory effects of the 1 percentage point increase in the Goods and Services Tax to 8 per cent, headline inflation is expected to come in at 4.5 per cent to 5.5 per cent. Core inflation is projected to come in at 2.5 per cent to 3.5 per cent.

“Upside risks remain, including from fresh shocks to global commodity prices and more persistent-than-expected tightness in the domestic labour market,” said MAS and MTI.

“At the same time, there are also downside risks such as a sharper-than-projected downturn in the advanced economies which could induce a general easing of inflationary pressures.”

Source: CNA/at(ac)